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REVIEW FISCAL YEAR 2022-23 FIRST, SECOND, AND THIRD QUARTER MEASURES A AND B REVENUES AND EXPENDITURES
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RECOMMENDATION
Information item only.
This item was originally scheduled for September 27, 2023 meeting which was cancelled due to a lack of quorum.
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Summary
City Ordinance 2013-07-09-1601, Section 19-Citizen Oversight stipulates the Measure A Citizens’ Advisory Committee: “Shall meet at least annually to review the expenditure of revenues generated by the tax imposed by this Ordinance and make recommendations to the City Council regarding those expenditures.”
Section 7 of the Committee’s bylaws (Informational Materials) also states: “At least quarterly, financial reports including proposed Budgets and Actuals with detailed supporting schedules will be sent to each Committee member. The reports will show revenue generated by Measure A, detailed line-item expenditures as presented in the annual budget relative to Measure B (public safety), and all other uses of remaining Measure A funds and State Board of Equalization reports.”
Attached for review by the Measure A Citizens’ Advisory Committee is the First, Second, and Third quarter financial reports for Fiscal Year (FY) 2022-23.
The FY 2022-23 Amended Budget, as shown on (Attachments A, B, and C), includes encumbrance rollovers from FY 2021-22 and Council approved budget amendments include an increase of $1.4 million for labor contracts approved after adoption of the annual budget. Measure A funded Police Department and Office of Violence Prevention (OVP) expenditures in the Amended Budget totaled approximately $33.9 million, an increase of $2,023,911 from the adopted budget.
Total revenues included in the FY 2022-23 Amended Budget are approximately $42.1 million. Measure A transaction and use tax revenues received as of March 31, 2023 totaled $30,383,558, reflecting seven (7) monthly payments for sales transactions occurring between July 2022 and January 2023. Also attached is the California Department of Tax and Fee Administration Sales Tax Revenues Report that indicates gross receipts of $12,383,458, $12,753,814, and $11,145,195 for the quarters ended September 30, 2022, December 31, 2022, and March 31, 2023 respectively (Attachment B), for a total of $36,282,467. The variance is due to the fact that remittances take some time to process on the state’s side and will not post to the City’s books until fourth quarter.
Expenditures through the third quarter totaled approximately $23.5 million, or 69% of the Amended Budget. The Police Department expended approximately $22.7 million, and the OVP spent $773,514 through the third quarter of the fiscal year. Combined salary and benefit costs for Police sworn and non-sworn positions were at 71% of the budget, including the budgeted vacancy savings. The Police Department continues its efforts to fill the positions funded by Measure A. As of March 31, 2023, the number of Measure A funded sworn officer vacancies was 11 of the 120 authorized.
At the third quarter, 75% is the target budget utilization. Most Police Department expenditure categories were under 75% of the budget at third quarter. Other supplies (vests, batons, flashlights, and ammunition, etc.) are under budget as a result of expenditure timing. Budget utilization for fuel is 81%, 6% over budget, due to an unpredictable cost-per-unit. Other supplies are utilizing only 30% of the budget due to timing. Inventory is kept, and supplies are ordered as needed throughout the year. Measure A funded training has utilized 67% of the amended budget. Training costs are cyclical and primarily consist of Police Academy costs based on the number of trainees and timing of classes.
OVP expended $773,514 through the end of the third quarter of FY 2022-23, which was 59% of the OVP Measure A funded budget. OVP salary and benefit expenses were 64% of the budget, primarily due to three vacancies. In addition, utilization of other services, fuel, and other supplies and expenses appear to be greatly under budget, due mostly in fact to transactions that will not occur until the fourth quarter. Furthermore, toward the end of the third quarter, OVP faced an uptick in community events and emergency relocation of high-risk clients. These circumstances collectively led to delays in processing expenditures.
The Marshall Plan expenses through the end of the third quarter have utilized 77% of the FY 2022-2023 Measure A tax revenues along the same period: 12% over the Measure B advisement. This ratio may be overstated due to the timing of the March remittance, which has not posted as of third-quarter end.
This quarterly report includes $227,968 in annual audit and tax collection expenses related to Measure A revenues. General Fund Services and Reserves display a surplus of $6.7 million, because revenues exceeded expenses at the end of the third quarter. Consistent with the Amended Budget, year-end revenues are projected to exceed expenses by year end. The General Fund Services and Reserve dollars are required to fund vital city services and will maintain service levels through the next economic downturn. The contribution Measure A makes to reserves would assist in continuing Police and OVP services in the next economic downturn. The Police Department made up over half (53% or $149 million) of the $283 million in FY 2022-23 budgeted General Fund expenditures.
Attachment A - Measure A and B FY 2022-23 1st Quarter Report
Attachment B - Measure A and B FY 2022-23 2nd Quarter Report
Attachment C - Measure A and B FY 2022-23 3rd Quarter Report
Attachment D - Measure A CFDTA Quarterly Revenue Report